LLAP Terran Orbital Corporation

• Record 2023 revenue of $135.9 million up 44% year-over-year
• Record 2023 gross profit of $8.6 million improved $25.8 million over prior year
• Manufacturing 78 satellites for Lockheed Martin for Space Development Agency programs
• Signed over $2.7 billion in new awards in 2023 representing more than 360 satellites
• Introduced seven new standard bus designs, spanning multiple size classes of satellites
• Launched new Responsive Space Initiative to deliver standard buses in 30 days, with integrated payloads in 60 days
• Commissioned new 50 Tech facility and broke ground on Goodyear expansion facility
• $71.7 million cash balance as of December 31, 2023

Terran Orbital Corporation (NYSE: LLAP) ("Terran Orbital" or the "Company"), a leading manufacturer of satellite products primarily serving the aerospace and defense industries, today announced financial results and operational highlights for the three and twelve months ended December 31, 2023.

Full Year 2023 Financial Highlights

• Generated record revenue of $135.9 million up 44% year-over-year
• Gross profit of $8.6 million compared to $17.3 million loss in 2022
• Adjusted gross profit(1) of $19.4 million compared to $2.2 million loss in 2022
• Net loss of $151.8 million improved from a net loss of $164.0 million in prior year

Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of Terran Orbital said, “I am pleased to report our company’s strong results for 2023. Our revenue growth and gross margin improvement affirm the strength of our strategy and execution. The future of space is responsive, and Terran Orbital is well-positioned to capitalize on this growing market segment. We're focused on sustainable growth, achieving profitability, and delivering solutions that meet evolving customer needs. Terran Orbital isn't just keeping pace with disruption, we're at the forefront, shaping the future of the space economy through responsive space.”

Results for the Fourth Quarter and Full Year 2023

Revenue for the fourth quarter of 2023 was $31.6 million, compared to $31.9 million for the same quarter in 2022, and $135.9 million for the full year, up 44% over the prior year. The increase in annual revenue was primarily due to the continued and increased level of progress made in satisfying our customer contracts and reflects the ongoing favorable impact from significant contract wins and modifications in recent periods. Revenue for 2023 was negatively impacted by an estimated $6.1 million of EAC adjustments on certain firm fixed price programs. EAC represents the total estimated cost-at-completion and is comprised of direct material, direct labor and manufacturing overhead applicable to a performance obligation.

Cost of sales for the quarter was $32.1 million compared to $42.7 million in the same period in the prior year, and $127.4 million for the full year, compared to $111.5 million for the prior year. The increase in cost of sales for the full year was primarily due to an increase of $25.8 million in direct and indirect program costs and $2.5 million in depreciation and amortization, partially offset by a decrease of $6.8 million in share-based compensation expense, $3.9 million loss reserve, and $2.1 million in scrap and obsolete materials and services. Cost of sales for the full year included an estimated negative impact of $2.1 million due to EAC adjustments on certain programs and non-recurring changes in estimates related to inventory.

Gross (loss) profit was $(0.5) million for the quarter, compared to $(10.8) million in the same period in the prior year, and $8.6 million for the full year, compared to $(17.3) million for the prior year. Excluding share-based compensation and depreciation and amortization included in cost of sales, Adjusted Gross (Loss) Profit(1) was $2.2 million for the quarter, compared to $(7.3) million for the same period in the prior year, and $19.4 million for the full year, compared to $(2.2) million in the prior year. EAC adjustments negatively impacted gross profit and Adjusted Gross Profit by an estimated $4.0 million during 2023.

Selling, general, and administrative expenses were $27.2 million for the quarter, compared to $27.6 million for the same period in the prior year, and $117.5 million for the full year, compared to $111.9 million for prior year. The increase for the full year was primarily driven by increases in salaries and wages, research and development expenses, business development expenses, depreciation and amortization, and other operating costs, partially offset by a decrease in share-based compensation expense and accounting, legal, and other professional fees.

Net loss was $42.8 million in the quarter, compared to a net loss of $33.0 million for the same period in the prior year, and $151.8 million for the full year, compared to $164.0 million for the prior year. The improvement in annual net loss was driven by the net positive impact of the items noted above as well as the absence of debt extinguishment in 2023, partially offset by the change in the fair values of warrant and derivative liabilities and higher interest expense in 2023.

Adjusted EBITDA(1) was $(20.6) million for the quarter 2023, compared to $(26.1) million in the same period in the prior year, and $(77.4) million for the full year, compared to $(69.5) million for the prior year. The decrease in Adjusted EBITDA for the full year was primarily due to an increase in selling, general, and administrative expenses as a result of our growth initiatives, partially offset by an increase in Adjusted Gross Profit.

Capital expenditures totaled $23.1 million in 2023, up from $22.5 million in 2022.

Balance Sheet and Liquidity

As of December 31, 2023, Terran Orbital had $71.7 million of cash on hand and approximately $313.8 million in gross debt obligations. The Company’s debt included $16.9 million in connection with an obligation under one of its PIPE investment subscription agreements, which is payable in cash or equity at the Company’s option, subject to certain limitations.

Backlog

Backlog represents the estimated dollar value of executed contracts, including both funded (firm orders for which funding is authorized and appropriated) and unfunded portions of such contracts, for which work has not been performed. The unfunded portion of enforceable contracts is accounted for as variable consideration and is reported at our estimate of the most likely amount to which the Company is expected to be entitled. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog.

Our backlog totaled $2.7 billion as of December 31, 2023, of which $2.4 billion is related to Rivada Space Networks, compared to backlog of $170.8 million as of December 31, 2022.

(1) Non-GAAP financial measure. Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to their nearest GAAP measures are included below.

2023 Milestones

Launched 12 satellites into space, including:

• Runner-1 for ImageSat International
• Tantrum for Lockheed Martin
• 10 satellites for Space Development Agency’s Tranche 0 Transport Layer

Awarded $2.7 billion in new contracts, including:

• 300 satellites for Rivada Space Networks
• 36 satellites for Lockheed Martin for the SDA Tranche 2 Transport Layer Beta
• 16 satellite constellation from new customer
• Contract with Axient to supply satellites for the Air Force Research Laboratory
• European Space Agency award for proximity operations and in-orbit servicing

Executing on expansion plans:

• Completed 50 Tech’s 60,000 sf addition to our existing manufacturing facility
• Increased clean room space ten-fold
• Completed our new printed circuit board assembly (PCBA) facility
• Completed our new module testing facility, over 2,500 modules built
• Expanded internal harness capability, delivered over 2,200 harnesses to programs
• Installed new large shaker table, TVAC chamber and shock testing facility
• Increased robotic assembly from module to panel (vehicle sub-assembly) level
• Broke ground on new 94,000 sf satellite assembly facility, anticipated to take possession in second quarter of 2024

Winning industry accolades

• Time Magazine’s TIME 100 Most Influential Companies 2023
• Fast Company’s Most Innovative Companies of 2023
• Business Intelligence Group’s BIG Award for Business, Small Business of the Year 2023
• Octane High Tech Awards, Best Large Disruptor / Innovator 2023
• Office of the Secretary of Defense's Patriotic Employer Award 2023

Conference Call Information

In light of the Company’s ongoing strategic review, management has decided to cancel its previously scheduled fourth quarter and full-year 2023 earnings call.

About Terran Orbital

Terran Orbital Corporation is a leading manufacturer of satellite products primarily serving the aerospace and defense industries. Terran Orbital provides end-to-end satellite solutions by combining satellite design, production, launch planning, mission operations, and on-orbit support to meet the needs of the most demanding military, civil, and commercial customers. Learn more at www.terranorbital.com.

Forward-Looking Statements

This press release contains, and the Company’s officers and representatives may from time to time make other public written and verbal announcements that contain, “forward-looking statements” for purposes of the federal securities laws. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. All statements, other than statements of present or historical facts, contained in this press release, regarding our expected future financial results, including for the fiscal year ending December 31, 2024, our business strategy, future operations, results of operations and its impact on our shareholders, our ability to execute, expectations regarding key customer contracts, and expectations, plans and objectives of management are forward-looking statements. Forward-looking statements are typically identified by such words as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook, “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “will,” “should,” “would” and “could” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements involve a number of risks, uncertainties (many of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by the forward-looking statements contained in this press release, including, but not limited to: Rivada’s ability to obtain additional funding to continue to finance its operations and fund future installments of our manufacturing contract; the status of Rivada’s regulatory approvals for its constellation and business operations and continuing ability to receive and maintain required regulatory approvals to conduct its business; Rivada’s right to terminate our contract for convenience or default; our ability to scale-up our manufacturing processes and facilities in order to meet the demands of the Rivada program and other programs; our ability to maintain compliance with the listing standards of the New York Stock Exchange; our ability to operate as a going concern; our ability to execute on programs and collect from customers in a timely manner; our ability to finance our operations, the ability to implement business plans, forecasts, and other expectations, and to identify and realize additional opportunities; anticipated timing, cost, financing and development of our satellite manufacturing capabilities; limited access, or access on unfavorable terms, to equity and debt capital markets and other funding sources that will be needed to fund operations and make investments; and the other risks disclosed in our Annual Report on Form 10-K filed with the SEC on April 1, 2024 and the prospectus supplement dated September 18, 2023 related to our Registration Statement on Form S-3, as amended (File No. 333-271093), which was declared effective by the SEC on April 18, 2023.

These forward-looking statements are based on management’s current expectations, plans, forecasts, assumptions, and beliefs concerning future developments and their potential effects. There can be no assurance that the future developments affecting us will be those that we have anticipated, and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. New risk factors and uncertainties may emerge from time to time, and it is not possible to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. You should read this press release with the understanding that our actual future results may be materially different from the expectations disclosed in the forward-looking statements we make. All forward-looking statements we make are qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release, and we do not assume any obligation to, and we do not intend to, update any forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as required by law.

TERRAN ORBITAL CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

71,663

 

 

$

93,561

 

Accounts receivable, net

 

 

14,735

 

 

 

4,754

 

Contract assets, net

 

 

21,390

 

 

 

6,763

 

Inventory

 

 

33,348

 

 

 

24,133

 

Prepaid expenses and other current assets

 

 

14,843

 

 

 

9,710

 

Total current assets

 

 

155,979

 

 

 

138,921

 

Property, plant, and equipment, net

 

 

46,449

 

 

 

24,743

 

Other assets

 

 

17,885

 

 

 

18,990

 

Total assets

 

$

220,313

 

 

$

182,654

 

Liabilities and shareholders' deficit:

 

 

 

 

 

Current portion of long-term debt

 

$

11,740

 

 

$

7,739

 

Accounts payable

 

 

22,850

 

 

 

21,188

 

Contract liabilities

 

 

103,924

 

 

 

27,228

 

Reserve for anticipated losses on contracts

 

 

977

 

 

 

2,860

 

Accrued expenses and other current liabilities

 

 

14,408

 

 

 

11,721

 

Total current liabilities

 

 

153,899

 

 

 

70,736

 

Long-term debt

 

 

171,033

 

 

 

142,620

 

Warrant and derivative liabilities

 

 

34,462

 

 

 

39,950

 

Other liabilities

 

 

18,555

 

 

 

20,769

 

Total liabilities

 

 

377,949

 

 

 

274,075

 

Shareholders' deficit:

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

20

 

 

 

14

 

Additional paid-in capital

 

 

355,144

 

 

 

269,574

 

Accumulated deficit

 

 

(513,011

)

 

(361,168

)

Accumulated other comprehensive income

 

 

211

 

 

 

159

 

Total shareholders' deficit

 

 

(157,636

)

 

(91,421

)

Total liabilities and shareholders' deficit

 

$

220,313

 

 

$

182,654

 

TERRAN ORBITAL CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

31,600

 

 

$

31,923

 

 

$

135,915

 

 

$

94,237

 

Cost of sales

 

 

32,134

 

 

 

42,710

 

 

 

127,355

 

 

 

111,494

 

Gross (loss) profit

 

 

(534

)

 

 

(10,787

)

 

 

8,560

 

 

 

(17,257

)

Selling, general, and administrative expenses

 

 

27,193

 

 

 

27,587

 

 

 

117,458

 

 

 

111,870

 

Loss on impairment

 

 

-

 

 

 

23,694

 

 

 

-

 

 

 

23,694

 

Loss from operations

 

 

(27,727

)

 

 

(62,068

)

 

 

(108,898

)

 

 

(152,821

)

Interest expense, net

 

 

13,182

 

 

 

9,637

 

 

 

48,502

 

 

 

26,644

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,141

 

Change in fair value of warrant and derivative liabilities

 

 

2,046

 

 

 

(40,975

)

 

 

(5,488

)

 

 

(43,300

)

Other (income) expense

 

 

(127

)

 

 

2,147

 

 

 

(103

)

 

 

4,514

 

Loss before income taxes

 

 

(42,828

)

 

 

(32,877

)

 

 

(151,809

)

 

 

(163,820

)

Provision for income taxes

 

 

11

 

 

 

102

 

 

 

34

 

 

 

160

 

Net loss

 

 

(42,839

)

 

 

(32,979

)

 

 

(151,843

)

 

 

(163,980

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

38

 

 

 

(132

)

 

 

52

 

 

 

195

 

Total comprehensive loss

 

$

(42,801

)

 

$

(33,111

)

 

$

(151,791

)

 

$

(163,785

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

200,403,671

 

 

 

142,930,585

 

 

 

170,076,500

 

 

 

128,261,443

 

Diluted

 

 

200,403,671

 

 

 

166,185,003

 

 

 

170,076,500

 

 

 

134,122,831

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

(0.23

)

 

$

(0.89

)

 

$

(1.28

)

Diluted

 

$

(0.21

)

 

$

(0.34

)

 

$

(0.89

)

 

$

(1.40

)

TERRAN ORBITAL CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(151,843

)

 

$

(163,980

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

7,843

 

 

 

4,008

 

Non-cash interest expense

 

 

32,034

 

 

 

14,309

 

Share-based compensation expense

 

 

21,467

 

 

 

51,082

 

Provision for losses on receivables and inventory

 

 

1,034

 

 

 

3,598

 

Loss on impairment

 

 

-

 

 

 

23,694

 

Loss on extinguishment of debt

 

 

-

 

 

 

23,141

 

Change in fair value of warrant and derivative liabilities

 

 

(5,488

)

 

 

(43,300

)

Amortization of operating right-of-use assets

 

 

1,224

 

 

 

994

 

Other non-cash, net

 

 

737

 

 

 

1,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(5,395

)

 

 

376

 

Contract assets

 

 

(14,571

)

 

 

(4,054

)

Inventory

 

 

(9,482

)

 

 

(14,564

)

Accounts payable

 

 

(3,205

)

 

 

12,981

 

Contract liabilities

 

 

76,470

 

 

 

10,012

 

Reserve for anticipated losses on contracts

 

 

(1,883

)

 

 

1,975

 

Accrued interest

 

 

9

 

 

 

(1,835

)

Other, net

 

 

(4,671

)

 

 

(1,241

)

Net cash used in operating activities

 

 

(55,720

)

 

 

(81,804

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(23,147

)

 

 

(22,469

)

Net cash used in investing activities

 

 

(23,147

)

 

 

(22,469

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from long-term debt

 

 

1,720

 

 

 

77,369

 

Proceeds from warrants and derivatives

 

 

47,445

 

 

 

101,734

 

Proceeds from Tailwind Two Merger and PIPE Investment

 

 

-

 

 

 

58,424

 

Proceeds from issuance of common stock

 

 

22,172

 

 

 

14,791

 

Proceeds from issuance of common stock under the Committed Equity Facility

 

 

-

 

 

 

1,795

 

Repayment of long-term debt

 

 

(8,818

)

 

 

(32,890

)

Payment of issuance costs

 

 

(6,176

)

 

 

(49,515

)

Proceeds from exercise of stock options

 

 

463

 

 

 

356

 

Exercise of equity-classified warrants

 

 

2

 

 

 

-

 

Payment of withholding taxes on net share settlements

 

 

-

 

 

 

(1,515

)

Net cash provided by financing activities

 

 

56,808

 

 

 

170,549

 

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

 

161

 

 

 

(40

)

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(21,898

)

 

 

66,236

 

Cash and cash equivalents at beginning of period

 

 

93,561

 

 

 

27,325

 

Cash and cash equivalents at end of period

 

$

71,663

 

 

$

93,561

 

TERRAN ORBITAL CORPORATION Non-GAAP Measures

To provide investors with additional information in connection with our results as determined in accordance with GAAP, we disclose the non-GAAP financial measures Adjusted Gross Profit and Adjusted EBITDA. These non-GAAP measures may be different from non-GAAP measures made by other companies. These measures may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income or other measures of financial performance or liquidity under GAAP.

TERRAN ORBITAL CORPORATION Reconciliations of GAAP to Non-GAAP Measures (Unaudited) (In thousands)

Adjusted Gross Profit

We define Adjusted Gross Profit as gross profit or loss adjusted for (i) share-based compensation expense included in cost of sales and (ii) depreciation and amortization included in cost of sales.

We believe that the presentation of Adjusted Gross Profit is appropriate to provide additional information to investors about our gross profit adjusted for certain non-cash items. Further, we believe Adjusted Gross Profit provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures.

There are material limitations to using Adjusted Gross Profit. Adjusted Gross Profit does not take into account all items which directly affect our gross profit or loss. These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted Gross Profit in conjunction with gross profit or loss as calculated in accordance with GAAP.

 

 

Three Months Ended December 31,

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Gross (loss) profit

 

$

(534

)

 

$

(10,787

)

 

$

8,560

 

 

$

(17,257

)

Share-based compensation expense

 

 

908

 

 

 

2,595

 

 

 

5,850

 

 

 

12,652

 

Depreciation and amortization

 

 

1,815

 

 

 

886

 

 

 

4,946

 

 

 

2,415

 

Adjusted gross profit (loss)

 

$

2,189

 

 

$

(7,306

)

 

$

19,356

 

 

$

(2,190

)

TERRAN ORBITAL CORPORATION Reconciliations of GAAP to Non-GAAP Measures (Unaudited) (In thousands)

Adjusted EBITDA

We define Adjusted EBITDA as net income or loss adjusted for (i) interest, (ii) taxes, (iii) depreciation and amortization, (iv) share-based compensation expense, (v) loss on extinguishment of debt, (vi) change in fair value of warrant and derivative liabilities, and (vii) other non-recurring and/or non-cash items.

We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about our operating profitability adjusted for certain non-cash items, non-routine items that we do not expect to continue at the same level in the future, as well as other items that are not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures.

There are material limitations to using Adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items, including depreciation and amortization, interest, taxes, and other adjustments which directly affect our net income or loss. These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EBITDA in conjunction with net income or loss as calculated in accordance with GAAP.

 

 

Three Months Ended December 31,

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(42,839

)

 

$

(32,979

)

 

$

(151,843

)

 

$

(163,980

)

Interest expense, net

 

 

13,182

 

 

 

9,637

 

 

 

48,502

 

 

 

26,644

 

Provision for income taxes

 

 

11

 

 

 

102

 

 

 

34

 

 

 

160

 

Depreciation and amortization

 

 

2,812

 

 

 

1,396

 

 

 

7,843

 

 

 

4,008

 

Share-based compensation expense

 

 

3,938

 

 

 

10,728

 

 

 

21,467

 

 

 

51,082

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,141

 

Change in fair value of warrant and derivative liabilities

 

 

2,046

 

 

 

(40,975

)

 

 

(5,488

)

 

 

(43,300

)

Loss on impairment

 

 

-

 

 

 

23,694

 

 

 

-

 

 

 

23,694

 

Other, net(a)

 

 

289

 

 

 

2,320

 

 

 

2,036

 

 

 

9,075

 

Adjusted EBITDA

 

$

(20,561

)

 

$

(26,077

)

 

$

(77,449

)

 

$

(69,476

)

(a) - Represents other expense and other charges and items. Non-recurring legal and accounting fees related to our transition to a public company and financing transactions are included herein.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240401480783/en/

ir@terranorbital.com 949-202-8476